Acid test on the way

Jeff Lawrence
is letting business know they’re in for a major scrap if they keep pushing for changes to Labor’s new Fair Work laws.

The ACTU secretary is also sending a message to Labor not to get too “business friendly".

His arguments for pay rises are partly based on household living costs rising by 50 per cent more than the consumer price index.

It is true the Reserve Bank’s commentary so far supports the union line that there is no evidence yet of a general wages blowout, apart from obvious “hot spots" in the resource sector. But it is early days for Labor’s new bargaining system, which is based on enterprise bargaining which requires “good faith" bargaining, with no broad role for old-style arbitration.

The acid test of the new system will come over the next two years, as existing non-union collective agreements and individual Australian workplace agreements expire.

Unions can represent even a single member in bargaining and have a role as default bargaining agent unless employees appoint somebody else.

The supply and demand for labour will play a big role. Almost full employment and skill shortages are causing strong wages growth in areas such as resources and construction even without union involvement.

Some sectors can afford to pay higher wage outcomes, others less so. It’s yet to be seen whether employers can negotiate improved productivity on the way through.